Key lessors see strong wide-body market despite worries

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Aug. 7, 2017, © Leeham Co.: Amid talk that Middle Eastern airlines, which are the largest group of users for wide-body aircraft, may defer Airbus and Boeing airplanes, there are conflicting signs that the bleak view of the sector isn’t as weak as perceived.

Just last week, two big lessors—Air Lease Corp and AerCap–of widebody airplanes said they are confident in the sector.

Few orders have been received for the Boeing 777-8 ultra-long range airplane. Sales for its larger sibling, the 777-9, have stalled. Along with the Airbus A380 and Boeing 747-8, demand is seen as limited.

AerCap ordered 30 Boeing 787s at the Paris Air Show. ALC has a significant order of Airbus A330neos.

And, the chairman of Emirates Airline said in an interview with the region’s  The National newspaper that despite the current challenges at the carrier, it expects to announce an order before the end of the year for either the 787 or the Airbus A350—and possibly the Airbus A380.

Quantities on the former weren’t discussed. Airbus is pitching 20 A380s, according to accounts.

Still, there are a large number of Boeing 777s and Airbus A330s coming off lease in the next few years that could slow orders if these aircraft are offered on the secondary market with low enough lease rates.

  • Air Lease Corp.’s wide-body aircraft are placed. A330neo orders late due to engine delays.
  • AerCap sees strong wide-body market, reaffirmed with 787-9 order.
  • More than 100 A330ceos and 777 Classics potentially entering secondary market soon.

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Pontifications: Context is everything

By Scott Hamilton

Aug. 7, 2017, © Leeham Co.: The quote appeared on Twitter, citing the chairman of Air Lease Corp, Steven Udvar-Hazy:

“I would simply but strongly encourage the OEMs to carefully review their production rate aspirations closely and realistically.”

Hazy, often (but erroneously) called the “Godfather of leasing,” is a voice to be reckoned with. He is enormously influential with Airbus, Boeing, lessors and the industry. He’s been a launch customer of several aircraft new aircraft models and, if he’s not the Godfather of leasing (this title really belongs to the late George Batchelor), Hazy raised aircraft leasing to a fine art.

So, when the quote appeared on Twitter, I sat up in my chair.

Was Hazy suggesting Airbus and Boeing will be producing too many airplanes, creating a supply-demand imbalance?

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Bjorn’s Corner: Electric aircraft, Part 6

By Bjorn Fehrm

August 03, 2017, ©. Leeham Co: In our search for an electric regional aircraft configuration, we found that a jet aircraft requires too high power levels. The higher speeds of a jet aircraft take the power levels beyond what we can handle with an electric hybrid propulsion system.

Our ambition is to transport 50 passengers on a regional network. For networks which have sectors around 200-300nm, the turboprop is the preferred regional aircraft. We will now re-direct our hybrid regional aircraft project to this market segment.

Figure 1. An ATR 42-600 48 seat regional turboprop. Source: Wikipedia.

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Can Airbus improve the A321neo?

By Bjorn Fehrm

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August 03, 2017, © Leeham Co.: The Airbus A321 has been in its own single aisle league for capacity and with the A321LR for capacity and range.

With Boeing’s launch of the 737 MAX 10, the unique position has taken a hit. With A321 occupying 40% of Airbus single aisle sales, Airbus is examining how to re-open the gap.There is much talk about an A322: an aircraft with new wing, engines and so forth. This is a major undertaking and will need new engines for its realization. Couldn’t Airbus improve the A321 as it is?

We look into what short term improvements can be done to the A321, and what these would give.

  • To understand what improvements can be made for the A321neo, one needs to understand its limitations.
  • We describe the present limits.
  • We find them in wing-loading, span-loading, engine thrust and tankage

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Etihad clears the decks

By Bjorn Fehrm

August 2, 2017, ©. Leeham Co: “Etihad, where to now?” was our headline on our May review of the Gulf airline. The 2016 revenue and earnings were not clear at the time.

Etihad group has now released the results, with a group loss of $1.9bn on revenues of $8.4bn. This is a shortfall of almost a quarter of the turnover, a dramatic change from a profit of $259m the year before.. Read more

Pontifications: Boeing-Bombardier complaint revisited

By Scott Hamilton

July 31, 2017, © Leeham Co.: It’s been in a quiet period in the trade complaint between Boeing and Bombardier.

The issue moved over to the US Department of Commerce (DOC) after the US International Trade Commission (ITC) concluded there were grounds to continue the probe. Then Boeing moved for a two-month delay, to September. There it sits. But as July moves into August and with the September decision date around the corner, it’s time to revisit the issue.

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Mid-Year production/delivery update: Bombardier, Embraer

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July 31, 2017, © Leeham Co.: It’s time for our mid-year update of the Big Four airframe manufacturers and their production/delivery outlooks.

Our update is through June 30. Although Boeing provides weekly order updates, Airbus, Bombardier and Embraer only do so monthly.

Our update data relies on the Airfinance Journal Fleet Tracker.

Today we look at Bombardier and Embraer.

  • Bombardier’s CSeries production skyline is said by the company to be sold out through 2019, but there are some “dicey” customers as early as next year.
  • BBD’s big challenge comes in 2020, given the goal of producing 120 airplanes a year.
  • The CRJ and Q400 lines continue to be a major challenge.
  • Embraer’s production line looks nearly full in 2018, but it, too has some customer issues.

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Embraer’s 2Q results: profits up, backlog declines

July 28, 2017, © Leeham Co.: Embraer reported first half net income of $101.6m after a $59.1m net profit for the second quarter.

Revenues for the half were $2.8bn and $1.77bn for the quarter.

EMB delivered 35 EJets during the quarter and 53 for the half.

Free cash flow for the quarter was $220m but just $20.7m for the half.

The company had $3.55bn in cash and securities at the end of the half.

The backlog of all civil, corporate and military programs declined from $19.2bn at March 31 to $18.5bn at June 30. A year ago, the backlog was $21.9bn.

Source: Embraer

The press release is here.

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Bombardier 2Q results: Turn around on track as Business aircraft, Trains perform well

By Bjorn Fehrm

July 28, 2017, ©. Leeham Co: Bombardier presented its 2Q2017 results this morning. Performance followed guidance, with stronger than expected margins in business aircraft and trains. Overall the business tracks the turnaround plan, presented end 2015.

Because of constrained delivery of Pratt & Whitney GTF engines for 1H 2017, only seven CSeries got delivered. A full year delivery of around 30 CSeries is still the target.

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Bjorn’s Corner: Electric aircraft, Part 5

By Bjorn Fehrm

July 28, 2017, ©. Leeham Co: In the last Corner, we looked at the mass of the propulsion components for a regional airliner.

Now we complete the mass estimations for the complete hybrid electric system.

We do that for our aircraft project, which is a regional jet airliner with 50 seats. It’s using a hybrid propulsion system with four electric propulsors fed by a Gas turbine driven generator. The system uses a battery as a redundant energy source.

Figure 1. Zunum aero regional airliners and a NASA boundary layer ingestion airliner. Source: Zunum aero.

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